When news publishers talk about digital subscriptions, they often tend to focus on the volume, or the number, of digital subscribers they have or are trying to get, but for Mitch Pugh, Executive Editor of The Post and Courier in South Carolina, the crucial number around digital subscriptions is the average rate per user, or ARPU.

“Volume is important, don’t get me wrong,” Pugh said during a recent WAN-IFRA Webinar. “We need to continue to get digital subscribers and retain the ones we have, but what I think is even more important, is this notion of ARPU, or average rate per user.”

“A lot of people do introductory rates of 99 cents for one month, three months or a whole year. You can do that if you are The New York Times and you have millions of subscribers,” he continued. “But if you’re a local news organisation just getting started, and you set your value at 99 cents, it’s going to become really, really hard to drive that rate per unit up.”

Pugh said that at The Post and Courier they believe quality content is the key to their success as a business, and that content has a value that is worth paying for.

“We went into the digital subscription business with that concept in mind and really focussing on what that average rate per user is. … Setting that value early is really important,” – Mitch Pugh, Executive Editor, The Post and Courier

The Charleston-based Post and Courier is locally owned and the largest newspaper in the state, which has a population of just over 5.1 million. The paper has around 45,000 print subscribers and another 10,000 digital subscribers, Pugh said. It has a newsroom staff of about 80 people.

While the paper is still published seven days a week in print, “we know our future is in digital, and probably in fewer days in print in the next few years, and so that is what we are planning for,” he said.

Beginning the digital transformation journey

The paper began its digital transformation journey in April 2017 when they were invited to take part in the Table Stakes programme.

"For those of you who aren’t familiar with Table Stakes, the essential concept is that, like in Vegas, Table Stakes are the sort of baseline competencies that you have to have as a news organisation to survive and thrive in an increasingly digital world," he said. (Editor's note: WAN-IFRA, with support from the Google News Initiative, launched Table Stakes Europe last year with the architect of the original programme, Doug Smith. A group of more than a dozen local news publishers are currently taking part in the programme.)

The Post and Courier has also since been invited to be part of two other major publisher transformation programmes, and Pugh said each one has been important in helping them to establish goals and develop the internal structures and processes necessary for achieving them.

One of these programmes was the Google Local News Initiative's subscriptions lab, which Pugh said was incredibly valuable for them.

"It was intensive; it was painful; frustrating. But it was transformational for us. Some of the recommendations they made were easy to implement and we saw quick results, and that was very rewarding. Others involved a long and arduous process that didn’t show results until much later, but it was a great programme, still paying off in big ways," – Mitch Pugh

Setting goals and benchmarking success

“One of the first things we really struggled with was how do we set goals? There were a lot of conversations and arguments over how aggressive, or how not aggressive, these goals ought to be," he said.

One of the partners in the programme was FTI Consulting, and Pugh said FTI helped them to benchmark what success could look like for them.

During this time, a major goal that emerged for The Post and Courier was to have its newsroom be fully financed by digital subscriptions by the end of 2022. To do this, they would need to bring in $5 million a year from digital subscriptions. The next question was how to get there.

One simple formula they learned, he said, was to take the number of households in your metro market and assume that you need about three times that number in terms of unique visitors for the top of your funnel. Then assume that you are only going to convert about 1.5 percent of those into paying subscribers.

“That gives you an idea of a reasonable goal in terms of the number of subscribers," Pugh said. "Then it comes down to you and what you think you can charge, and what you think your audience is willing to pay to get to your revenue figure.”

As a result, The Post and Courier was able to determine that in their metro market, they could eventually get between 18,000 and 37,000 subscribers, and somewhere between $5 million and $11 million dollars in annual digital subscription revenue.

“If we can get to the higher end of that figure, our news business, and this news organisation, will be strong and thriving in Charleston for many years to come. What this really gave us is a feeling that there is light at the end tunnel, and it is not a train, it’s actually daylight,” –Mitch Pugh

Small ARPU increases can make big revenue differences

Small increases in ARPU can make big differences in overall revenue, Pugh said, and added that in the past two years, The Post and Courier has gone from charging a little under 10 dollars per unit (per user per month) to nearly 12 dollars.

“Every little movement, 50 cents in average rate, is going to make a huge impact on your overall revenue. That’s something as publishers, we don’t spend enough time thinking about or talking about,” he said.

"We’ve really focussed on this in the last three months, and for our new starts, the average rate they are paying is right around 15 dollars (a month). We know our ultimate goal is to get to 20 dollars, and if we can get 18,000-37,000 people paying us 20 dollars a month, we will be a more profitable company than we are today. That’s a really good message to take to our board and the people who are investing in us,” – Mitch Pugh

The other big thing that Pugh said they got out of the Google programme is that like so many publishers today, they have tons of data, but which ones are really important? Where should they focus?

"We were able, through that process, to come up with 16 metrics that we thought were the key metrics that we needed to watch every month," he said, "And out of those 16, there are four or five that are super critical, ARPU being one of them, churn being another."

The Post and Courier has created a dashboard to regularly track these metrics along and combine them with goals that FTI helped them identify, Pugh said. "That has really helped us understand the road map for activity for the digital subscription team: What are the metrics that we are trying to impact? What are the key drivers that we want to see change in? What are the actions that are tied to that and measuring the outcomes. I think that has really helped us move faster and more effectively," he said.

Set your meter for free stories low, really low

After the ARPU rate, Pugh said, another key driver in achieving success with digital subscriptions is to keep the number of freely available stories set very low.

"Most people’s meter settings are too liberal. They give people too many free views, especially the audience who already knows you. That fanatic and loyal audience that is already reading your content. If they are visiting your site more than two times every 45 days, you need to get them to pay you," – Mitch Pugh

Acknowledging that like most publishers, "our meter has been all over the place," he said that when they started, they had four or five different reader segments ranging from fly-by to fanatic, and the meter was different based on the user's consumption. Now, however, they've reached the point "where our meter is pretty much the same for everybody: It’s two page views every 45 days. It’s a very tight meter."

Free COVID-19 content, but registration required

Noting that The Post and Courier did lift its paywall in March around the time that schools and non-essential businesses began to close, from 15 March to 8 April, Pugh said that everything that was Coronavirus or COVID-19 related, was free for readers.

"We put a message at the top of those stories letting people know that we were doing it for free, as a public service, and we encouraged them to subscribe," he said.

And despite everything being free, subscriptions actually saw a significant jump, he said. On some days The Post and Courier was seeing 80 to 90 percent growth year-over-year, in the number of subscriptions.

"We didn’t lose any business at all by doing that, in fact, it increased," he said. "But I think the more important thing that we did, and this is something that if you have a metered site, I would strongly encourage you to look at this, on April 8th, we put a registration wall on all of our COVID content, so it’s still free, anybody can read it for free, but they have to give us an email address. And in two weeks we signed up 30,000 registered users."

These registrations are important for a couple of reasons, Pugh noted. First, they are letting their readers know there is value on their site, and secondly, those 30,000 email registrations are hot leads for digital subscriptions.

"We know that a known user is significantly more likely to convert to a paying user than an anonymous user. You’ve got all of this anonymous traffic, some of it fly-by, coming to your sites right now, and this is a great way to, one, get them on to a newsletter, so everybody who registered is getting a newsletter, and now they are in a funnel for our marketing team, a messaging funnel to get them to pay," – Mitch Pugh